GlobeNewswire Inc | Sep 21, 2021 06:55AM EDT

September 21, 2021

MEMPHIS, Tenn., Sept. 21, 2021 (GLOBE NEWSWIRE) -- AutoZone, Inc. (NYSE: AZO) today reported net sales of $4.9 billion for its fourth quarter (16 weeks) ended August 28, 2021, an increase of 8.1% from the fourth quarter of fiscal 2020 (16 weeks). Domestic same store sales, or sales for stores open at least one year, increased 4.3% for the quarter.

Our strong sales and earnings this quarter are a testament to our AutoZoners ongoing commitment to going the extra mile for our customers. Our retail business performed very well this quarter ending with virtually flat same store sales on top of last years historic growth of over 20%. And, our commercial business growth continues to be exceptionally strong at 21.2%.The investments we are making continue to strengthen our competitive positioning in all the sectors and markets we compete. We are optimistic about our growth prospects heading into our new fiscal year, said Bill Rhodes, Chairman, President and Chief Executive Officer.

For the quarter, gross profit, as a percentage of sales, was 52.3%, a decrease of 82 basis points versus the prior year. The decrease in gross margin was primarily driven by the initiatives to accelerate growth in our Commercial business. Operating expenses, as a percentage of sales, was 31.0% versus 30.7% last year. Our expense growth was primarily driven by higher payroll to support our sales and customer service initiatives, partially offset by a decrease in pandemic related expenses. In addition, we are investing in technology to underpin our growth initiatives and we are seeing higher wage costs in our stores and distribution centers.

Operating profit increased 2.6% to $1.0 billion. Net income for the quarter increased 6.1% over the same period last year to $785.8 million, while diluted earnings per share increased 15.5% to $35.72 from $30.93 in the year-ago quarter.

For the fiscal year ended August 28, 2021, sales were $14.6 billion, an increase of 15.8% from the prior year, while domestic same store sales were up 13.6%. Gross profit, as a percentage of sales, was 52.8% versus 53.6%. The decrease in gross margin was primarily attributable to the initiatives to accelerate growth in our Commercial business. Operating expenses, as a percentage of sales, were 32.6% versus 34.5%. The reduction in operating expenses as a percent of sales was driven by strong sales growth and a decrease in pandemic related expenses. For fiscal 2021, net income increased 25.2% to $2.2 billion and diluted earnings per share increased 32.3% to $95.19 from $71.93. Return on invested capital finished at 41.0%.

Under its share repurchase program, AutoZone repurchased 592 thousand shares of its common stock for $900 million during the fourth quarter, at an average price of $1,519 per share. For the fiscal year, the Company repurchased 2.6 million shares of its common stock for $3.4 billion, at an average price of $1,303 per share. At year end, the Company had $417.6 million remaining under its current share repurchase authorization.

The Companys inventory increased 3.7% over the same period last year, driven by new stores and improved product assortment. Inventory per store was $686 thousand versus $683 thousand last year and $701 thousand last quarter. Net inventory, defined as merchandise inventories less accounts payable, on a per store basis, was negative $203 thousand versus negative $104 thousand last year and negative $167 thousand last quarter.

While the COVID-19 pandemic continues to impact our customers and AutoZoners lives, our primary focus remains everyones health and well-being. We will continue to help wherever we can to make our stores the best and safest place to shop for everyones automotive needs. We remain committed to helping our AutoZoners during these difficult times. As always, we will take nothing for granted while striving for continued sales growth in fiscal 2022. As we continue to prudently invest capital in our business, we remain committed to our long-term, disciplined, approach of increasing operating earnings and cash flow while utilizing our balance sheet effectively, said Rhodes.

During the quarter ended August 28, 2021, AutoZone opened 76 new stores in the U.S., 29 stores in Mexico and five stores in Brazil. At our fiscal year end, the Company had 6,051 stores in the U.S., 664 in Mexico and 52 in Brazil for a total store count of 6,767.

AutoZone is the leading retailer and a leading distributor of automotive replacement parts and accessories in the Americas. Each AutoZone store carries an extensive product line for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories, and non-automotive products. Many stores also have a commercial sales program that provides commercial credit and prompt delivery of parts and other products to local, regional and national repair garages, dealers, service stations and public sector accounts. We also have commercial programs in all stores in Mexico and Brazil. AutoZone also sells the ALLDATA brand diagnostic and repair software through www.alldata.com. Additionally, we sell automotive hard parts, maintenance items, accessories and non-automotive products through www.autozone.com and our commercial customers can make purchases through www.autozonepro.com. We also provide product information on our Duralast branded products through www.duralastparts.com. AutoZone does not derive revenue from automotive repair or installation.

AutoZone will host a conference call this morning, Tuesday, September 21, 2021, beginning at 10:00 a.m. (EDT) to discuss its fourth quarter results. This call is being web cast and can be accessed, along with supporting slides, at AutoZones website at www.autozone.com and clicking on Investor Relations. Investors may also listen to the call by dialing (877) 407-8031. In addition, a telephone replay will be available by dialing (877) 481-4010 through October 19, 2021,11:59 pm (EDT).

This release includes certain financial information not derived in accordance with generally accepted accounting principles (GAAP). These non-GAAP measures include adjustments to reflect return on invested capital, adjusted debt and adjusted debt to EBITDAR. The Company believes that the presentation of these non-GAAP measures provides information that is useful to investors as it indicates more clearly the Companys comparative year-to-year operating results, but this information should not be considered a substitute for any measures derived in accordance with GAAP. Management targets the Companys capital structure in order to maintain its investment grade credit ratings. The Company believes this is important information for the management of its debt levels and share repurchases. We have included a reconciliation of this additional information to the most comparable GAAP measures in the accompanying reconciliation tables.

Certain statements contained in this press release constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements typically use words such as believe, anticipate, should, intend, plan, will, expect, estimate, project, positioned, strategy, seek, may, could, and similar expressions. These are based on assumptions and assessments made by our management in light of experience and perception of historical trends, current conditions, expected future developments and other factors that we believe to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties, including without limitation: product demand; energy prices; weather; competition; credit market conditions; cash flows; access to available and feasible financing; future stock repurchases; the impact of recessionary conditions; consumer debt levels; changes in laws or regulations; risks associated with self-insurance; war and the prospect of war, including terrorist activity; the impact of public health issues, such as the ongoing global coronavirus pandemic; inflation; the ability to hire, train and retain qualified employees; construction delays; the compromising of confidentiality, availability or integrity of information, including cyber-attacks; historic growth rate sustainability; downgrade of our credit ratings; damages to our reputation; challenges in international markets; failure or interruption of our information technology systems; origin and raw material costs of suppliers; disruption in our supply chain; impact of tariffs; anticipated impact of new accounting standards; and business interruptions. Certain of these risks and uncertainties are discussed in more detail in the Risk Factors section contained in Item 1A under Part 1 of the Companys Annual Report on Form 10-K for the year ended August 29, 2020, and these Risk Factors should be read carefully. Forward-looking statements are not guarantees of future performance, and actual results, developments and business decisions may differ from those contemplated by such forward-looking statements, and events described above and in the Risk Factors could materially and adversely affect our business. However, it should be understood that it is not possible to identify or predict all such risks and other factors that could affect these forward-looking statements. Forward-looking statements speak only as of the date made. Except as required by applicable law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact Information:Financial: Brian Campbell at (901) 495-7005, brian.campbell@autozone.comMedia: David McKinney at (901) 495-7951, david.mckinney@autozone.com



AutoZone's 4th Quarter Highlights - Fiscal 2021

Condensed Consolidated Statements of Operations4th Quarter, FY2021(in thousands, except per share data) GAAP Results 16 Weeks Ended 16 Weeks Ended August 28, 2021 August 29, 2020^(2) Net sales $ 4,913,484 $ 4,545,968 Cost of sales 2,345,646 2,132,993 Gross profit 2,567,838 2,412,975 Operating, SG&A expenses 1,523,808 1,394,930 Operating profit (EBIT) 1,044,030 1,018,045 Interest expense, net 58,119 65,638 Income before taxes 985,911 952,407 Income taxes^(1) 200,140 211,950 Net income $ 785,771 $ 740,457 Net income per share: Basic $ 36.72 $ 31.67 Diluted $ 35.72 $ 30.93 Weighted average shares outstanding: Basic 21,400 23,383 Diluted 22,000 23,942 ^(1)The sixteen weeks ended August 28, 2021 and the comparable prior yearperiod include $21.2M and $3.3M in tax benefits from stock option exercises,respectively^(2)The sixteen weeks ended August 29, 2020 was negatively impacted by pandemicrelated expenses, including Emergency Time-Off of approximately $10.7M(pre-tax)

Fiscal Year 2021 (in thousands, except per share data) GAAP Results 52 Weeks Ended 52 Weeks Ended August 28, 2021^(2) August 29, 2020^(2) Net sales $ 14,629,585 $ 12,631,967 Cost of sales 6,911,800 5,861,214 Gross profit 7,717,785 6,770,753 Operating, SG&A expenses 4,773,258 4,353,074 Operating profit (EBIT) 2,944,527 2,417,679 Interest expense, net 195,337 201,165 Income before taxes 2,749,190 2,216,514 Income taxes^(1) 578,876 483,542 Net income $ 2,170,314 $ 1,732,972 Net income per share: Basic $ 97.60 $ 73.62 Diluted $ 95.19 $ 71.93 Weighted average shares outstanding: Basic 22,237 23,540 Diluted 22,799 24,093

^(1)The 52 weeks ended August 28, 2021 and the comparable prior year periodinclude $56.4M and $20.9M in tax benefits from stock option exercises,respectively^(2)The 52 weeks ended August 28, 2021 and the comparable prior year periodwere negatively impacted by pandemic related expenses, including EmergencyTime-Off of approximately $43.0M (pre-tax) and $83.9M (pre-tax), respectively

Selected Balance Sheet Information(in thousands) August 28, 2021 August 29, 2020 Cash and cash equivalents $ 1,171,335 $ 1,750,815 Merchandise inventories 4,639,813 4,473,282 Current assets 6,415,303 6,811,872 Property and equipment, net 4,856,891 4,509,221 Operating lease right-of-use 2,718,712 2,581,677 assetsTotal assets 14,516,199 14,423,872 Accounts payable 6,013,924 5,156,324 Current liabilities 7,369,754 6,283,091 Operating lease liabilities, 2,632,842 2,501,560 less current portionTotal debt 5,269,820 5,513,371 Stockholders' deficit (1,797,536 ) (877,977 )Working capital (954,451 ) 528,781

AutoZone's 4th Quarter Highlights - Fiscal 2021 Condensed Consolidated Statements of Operations Adjusted Debt / EBITDAR (in thousands, exceptadjusted debt to EBITDAR Trailing 4 Quarters ratio) August 28, 2021 August 29, 2020 Net income $ 2,170,314 $ 1,732,972 Add: Interest expense 195,337 201,165 Income tax expense 578,876 483,542

EBIT 2,944,527 2,417,679 Add: Depreciation and 407,683 397,466 amortization Rent expense^(1) 345,380 329,783 Share-based expense 56,112 44,835 EBITDAR $ 3,753,702 $ 3,189,763 Debt $ 5,269,820 $ 5,513,371 Financing lease liabilities 276,054 223,353 Add: Rent x 6^(1) 2,072,280 1,978,696 Adjusted debt $ 7,618,154 $ 7,715,420 Adjusted debt to EBITDAR 2.0 2.4 Adjusted Return on Invested Capital (ROIC)(in thousands, except ROIC) Trailing 4 Quarters August 28, 2021 August 29, 2020 Net income $ 2,170,314 $ 1,732,972 Adjustments: Interest expense 195,337 201,165 Rent expense^(1) 345,380 329,783 Tax effect^(2) (114,091 ) (115,747 ) Adjusted after-tax return $ 2,596,940 $ 2,148,173 Average debt^(3) $ 5,416,471 $ 5,375,356 Average stockholders' (1,397,892 ) (1,542,355 ) deficit^(3)Add: Rent x 6^(1) 2,072,280 1,978,696 Average financing lease 237,267 203,998 liabilities^(3)Invested capital $ 6,328,126 $ 6,015,695 Adjusted After-Tax ROIC 41.0 % 35.7 % ^(1) The table below outlines the calculation of rent expense andreconciles rent expense to total lease cost, per ASC 842, the most directly comparable GAAP financial measure, for the trailing fourquarters ended August 28, 2021 and August 29, 2020 (in thousands): Total lease cost, per ASC 842, for the trailing four quarters ended August $ 427,443 28, 2021 Less: Financing lease interest and (56,334 ) amortization Variable operating lease Less: components, related to insurance (25,729 ) and common area maintenance

Rent expense for the trailing four $ 345,380 quarters ended August 28, 2021 Total lease cost, per ASC 842, for the trailing four quarters ended August $ 415,505 29, 2020 Financing Less: lease (60,275 ) interest and amortization Variable operating lease Less: components, related to insurance (25,447 ) and common area maintenance

Rent expense for the trailing four $ 329,783 quarters ended August 29, 2020 ^(2) Effective tax rate over trailing four quarters ended August 28, 2021 and August 29, 2020 is 21.1% and 21.8%, respectively^(3)All averages are computed based on trailing 5 quarter balances Other Selected Financial Information(in thousands) August 28, 2021 August 29, 2020 Cumulative share repurchases $ 25,732,431 $ 22,354,110 ($ since fiscal 1998)Remaining share repurchase 417,569 795,890 authorization ($) Cumulative share repurchases 150,288 147,696 (shares since fiscal 1998) Shares outstanding, end of 21,138 23,376 quarter 16 Weeks Ended 16 Weeks Ended 52 Weeks 52 Weeks Ended Ended August 28, 2021 August 29, 2020 August 28, August 29, 2021 2020 Depreciation and $ 129,639 $ 125,351 $ 407,683 $ 397,466amortization Capital spending 246,114 183,848 621,767 457,736

AutoZone's 4th Quarter Highlights - Fiscal 2021Selected Operating HighlightsCondensed Consolidated Statements of Operations Store Count &Square Footage 16 Weeks Ended 16 Weeks Ended 52 Weeks Ended 52 Weeks Ended August 28, 2021 August 29, 2020 August 28, 2021 August 29, 2020Domestic: Beginning 5,975 5,836 5,885 5,772 stores Stores 76 49 167 113 opened Stores - - (1 ) - closed Ending domestic 6,051 5,885 6,051 5,885 stores . Relocated 1 4 12 5 stores Stores with 5,179 5,007 5,179 5,007 commercial programs Square footage 39,727 38,559 39,727 38,559 (in thousands) Mexico: Beginning 635 610 621 604 stores Stores 29 11 43 17 opened Ending Mexico 664 621 664 621 stores Brazil: Beginning 47 38 43 35 stores Stores 5 5 9 8 opened Ending Brazil 52 43 52 43 stores Total 6,767 6,549 6,767 6,549 Square footage 45,057 43,502 45,057 43,502 (in thousands) Square footage 6,658 6,643 6,658 6,643 per store Sales Statistics($ in thousands, except sales per average square foot) 16 Weeks Ended 16 Weeks Ended 52 Weeks Ended 52 Weeks EndedTotal AutoZoneStores(Domestic, August 28, 2021 August 29, 2020 August 28, 2021 August 29, 2020Mexico andBrazil) Sales per average $ 720 $ 686 $ 2,160 $ 1,914 store Sales per average $ 108 $ 103 $ 325 $ 288 square foot Total AutoParts(Domestic, Mexico andBrazil) Total auto parts $ 4,830,136 $ 4,473,098 $ 14,381,712 $ 12,405,929 sales % Increase 8.0 % 14.2 % 15.9 % 6.5 % vs. LY Domestic Commercial Total domestic $ 1,182,626 $ 975,573 $ 3,345,450 $ 2,727,767 commercial sales % Increase 21.2 % 10.0 % 22.6 % 6.4 % vs. LY Average sales per $ 14.4 $ 12.2 $ 12.6 $ 10.6 program per week % Increase 18.0 % 14.2 % 18.9 % 5.6 % vs. LY All Other,including ALLDATA All other $ 83,348 $ 72,870 $ 247,873 $ 226,038 sales % Increase 14.4 % 2.1 % 9.7 % 3.4 % vs. LY 16 Weeks Ended 16 Weeks Ended 52 Weeks Ended 52 Weeks Ended August 28, 2021 August 29, 2020 August 28, 2021 August 29, 2020Domestic same 4.3 % 21.8 % 13.6 % 7.4 %store sales InventoryStatistics (TotalStores) as of as of August 28, 2021 August 29, 2020 Accounts payable/ 129.6 % 115.3 % inventory ($ in thousands) Inventory $ 4,639,813 $ 4,473,282 Inventory 686 683 per store Net inventory (1,374,111 ) (683,042 ) (net of payables) Net inventory (203 ) (104 ) / per store Trailing 5 Quarters August 28, 2021 August 29, 2020 Inventory 1.5 x 1.3 x turns